Spanish Stocks And Bonds Bleeding Into The Close

Europe is closing on a decidedly negative tone led by weakness in Spain specifically. EURUSD in 80 pips off its earlier highs (under 1.2950) as Spain's 10Y spreads rises once again (now up 33bps in thelast few days) and its stock index (IBEX) is down 4.25% since last Thursday (as is Italy's FTSEMIB). The front-end of the Spanish yield curve is also leaking higher in yield rather quickly as fast money exits. Credit markets tracked stocks but were less volatile on the day. Europe's VIX dropped modestly which combined with credit and equity weakness suggests perhaps hedges being lifted and real-money unwinds. The Draghi-rally trend is now over - as S&P futures test the Dream lows (with European stocks still outperforming US post-Draghi).